Principles of Auditing and Other Assurance Services 18th Edition Whittington Test Bank

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Principles of Auditing and Other Assurance Services 18th Edition Whittington Test Bank

Description

5
Student: ___________________________________________________________________________
1. The professional standards consider calculating depreciation expense a routine transaction.

True False

2. The most reliable form of documentary evidence generally is considered to be documents created by the client.

True False

3. A vendors invoice is an example of documentary evidence created by a third party and held by the client.

True False

4. In performing analytical procedures, the auditors may use dollar amounts, physical quantities, or percentages.

True False

5. The primary purpose of a letter of representations is to obtain additional evidence about specific accounts.

True False

6. The auditors should propose an adjusting journal entry for all material related-party transactions.

True False

7. When the risk of material misstatement for an account is high, the auditors may perform additional substantive procedures to restrict detection risk to a lower level.

True False

8. Working papers of continuing audit interest usually are filed with the administrative working papers.

True False

9. The use of lead schedules is designed to increase the detail of the working trial balance.

True False

10. Adjusting journal entries are ordinarily recorded by the client, while reclassifying journal entries need not be recorded.

True False

11. To be effective, analytical procedures performed near the end of the audit should be performed by

A. The partner performing the quality review of the audit.

B. A beginning staff accountant who has had no other work related to the engagement.

C. A manager or partner who has a comprehensive knowledge of the clients business and industry.

D. The CPA firms quality control manager.

12. The components of the risk of misstatement are:

A. Option A

B. Option B

C. Option C

D. Option D

13. Financial statement assertions are established for classes of transactions

A. Option A

B. Option B

C. Option C

D. Option D

14. Further audit procedures include:

A. Option A

B. Option B

C. Option C

D. Option D

15. Assertions that have a meaningful bearing on whether an account balance, transaction class or disclosure is fairly stated are referred to as:

A. Appropriate assertions.

B. Sufficient assertions.

C. Relevant assertions.

D. Reliable assertions.

16. Which of the following is not an assertion relating to classes of transactions?

A. Accuracy.

B. Sufficiency.

C. Cutoff.

D. Classification.

17. Which of the following is required documentation in an audit?

A. A list of major accounts.

B. A flowchart of the clients organization.

C. A written audit program.

D. A memo setting forth the scope of the audit.

18. Which of the following is not considered to be an analytical procedure?

A. Comparisons of financial statement amounts with source documents.

B. Comparisons of financial statement amounts with nonfinancial data.

C. Comparisons of financial statement amounts with budgeted amounts.

D. Comparisons of financial statement amounts with comparable prior year amounts.

19. An auditor plans to apply substantive tests to the details of asset and liability accounts as of an interim date rather than as of the balance sheet date. The auditor should be aware that this practice

A. Eliminates the use of certain statistical sampling methods that would otherwise be available.

B. Presumes that the auditor will reperform the tests as of the balance sheet date.

C. Should be especially considered when there are rapidly changing economic conditions.

D. Potentially increases the risk that errors that exist at the balance sheet date will not be detected.

20. An auditor compared the current-year gross margin with the prior-year gross margin to determine if cost of sales is reasonable. What type of audit procedure was performed?

A. Test of transactions.

B. Analytical procedures.

C. Test of controls.

D. Test of details.

21. The inspection of a vendors invoice by the auditors is:

A. Direct evidence about occurrence of a transaction.

B. Physical evidence about occurrence of a transaction.

C. Documentary evidence about occurrence of a transaction.

D. Part of the clients accounting system.

22. The auditors of Smith Electronics wish to limit the audit risk of material misstatement in the test of accounts receivable to 5 percent. They believe that inherent risk is 100%, and there is a 40% risk that material misstatement could have bypassed the clients system of internal control. What is the maximum detection risk the auditors should specify in their substantive procedures of details of accounts receivable?

A. 5%.

B. 12.5%.

C. 42.7%.

D. 60%.

23. Analytical procedures are required at the risk assessment stage and as:

A. Tests of internal control.

B. Substantive procedures.

C. A part of the final overall review.

D. Computer generated procedures.

24. During financial statement audits, auditors seek to restrict which type of risk?

A. Control risk.

B. Detection risk.

C. Inherent risk.

D. Account risk.

25. Which of the following groups are not considered a specialist by AICPA Professional Standards?

A. Appraisers.

B. Internal auditors.

C. Engineers.

D. Geologists.

26. CPA wishes to use a representation letter as a substitute for performing other audit procedures. Doing so:

A. Violates professional standards.

B. Is acceptable, but should only be done when cost justified.

C. Is acceptable, but only for non-public clients.

D. Is acceptable and desirable under all conditions.

27. Which of the following best describes the problem with the use of published industry averages for analytical procedures?

A. Lack of comparability.

B. Lack of sufficiency.

C. Lack of accuracy.

D. Lack of availability.

28. In auditing an asset valued at fair value, which of the following potentially provides the auditor with the strongest evidence?

A. A price for a similar asset obtained from an active market.

B. An appraisal obtained discounting future cash flows.

C. Managements judgment of the cost to purchase an equivalent asset.

D. The historical cost of the asset.

29. An auditor should expect that fair value is the price that would be received to sell an asset in an orderly transaction between the market participants at the:

A. Acquisition date of the asset.

B. Audit report date.

C. Expected replacement date of the asset.

D. Measurement date (ordinarily the date of the financial statements).

30. Which of the following best describes the reason that auditors are concerned with the detection of related party transactions?

A. The financial statements must often be adjusted for the effects of material related party transactions.

B. Material related party transactions must be disclosed in the notes to the financial statements.

C. The substance of related party transactions will differ from their form.

D. In a related party transaction one party has the ability to exercise significant influence over the other party.

31. Which of the following is not a basic procedure used in an audit?

A. Risk assessment procedures.

B. Substantive procedures.

C. Tests of controls.

D. Tests of direct evidence.

32. Which of the following is not a financial statement assertion relating to account balances?

A. Completeness.

B. Existence.

C. Rights and obligations.

D. Recorded value and discounts.

33. Which of the following is generally true about the sufficiency of audit evidence?

A. The amount of evidence that is sufficient varies inversely with the acceptable risk of material misstatement.

B. The amount of evidence concerning a particular account varies inversely with the materiality of the account.

C. The amount of evidence concerning a particular account varies inversely with the inherent risk of the account.

D. When evidence is appropriate with respect to an account it is also sufficient.

34. Which of the following is true about analytical procedures?

A. Performing analytical procedures results in the most reliable form of evidence.

B. Analytical procedures are tests of controls used to evaluate the quality of a clients internal control.

C. Analytical procedures are used for planning, but they should not be used to obtain evidence as to the reasonableness of specific account balances.

D. Analytical procedures are used in risk assessment, as a substantive procedure for specific accounts, and near the completion of the audit of the audited financial statements.

35. Which of the following is a basic approach often used by auditors to evaluate the reasonableness of accounting estimates?

A. Confirmation.

B. Observation.

C. Reviewing subsequent events or transactions.

D. Analyzing corporate organizational structure.

36. An auditor is performing an analytical procedure that involves comparing a clients account balances over time. This technique is referred to as:

A. Vertical analysis.

B. Horizontal analysis.

C. Cross-sectional analysis.

D. Comparison analysis.

37. An auditor is performing an analytical procedure that involves comparing a clients ratios with other companies in the same industry. This technique is referred to as:

A. Vertical analysis.

B. Horizontal analysis.

C. Cross-sectional analysis.

D. Comparison analysis.

38. An auditor is performing an analytical procedure that involves developing common-size financial statements. This technique is referred to as:

A. Vertical analysis.

B. Horizontal analysis.

C. Cross-sectional analysis.

D. Comparison analysis.

39. Which of the following is not a basic approach often used by auditors to evaluate the reasonableness of accounting estimates?

A. Confirmation of amounts.

B. Review of managements process of development.

C. Independent development of an estimate.

D. Review of subsequent events.

40. The audit time budget is an example of:

A. A supporting schedule.

B. An administrative working paper.

C. A lead schedule.

D. A corroborative working paper.

41. A schedule set up to combine similar general ledger accounts, the total of which appears on the working trial balance as a single amount, is referred to as a:

A. Supporting schedule.

B. Lead schedule.

C. Corroborating schedule.

D. Reconciling schedule.

42. Which of the following is not a function of working papers?

A. Provide support for the auditors report.

B. Provide support for the accounting records.

C. Aid partners in planning and conducting future audits.

D. Document staff compliance with generally accepted auditing standards.

43. A schedule listing account balances for the current and previous years, and columns for adjusting and reclassifying entries proposed by the auditors to arrive at the final mount that will appear in the financial statement, is referred to as a:

A. Working trial balance.

B. Lead schedule.

C. Summarizing schedule.

D. Supporting schedule.

44. The auditors use analytical procedures during the course of an audit. The most important phase of performing these procedures is the:

A. Vouching of all data supporting various ratios.

B. Investigation of significant variations and unusual relationships.

C. Comparison of client-computed statistics with industry data on a quarterly and full-year basis.

D. Recalculation of industry date.

45. The auditors must obtain written client representations that normally should be signed by:

A. The president and the chairperson of the board.

B. The treasurer and the internal auditor.

C. The chief executive officer and the chief financial officer.

D. The corporate counsel and the audit committee chairperson.

46. Which of the following ultimately determines the specific audit procedures necessary to provide independent auditors with a reasonable basis for the expression of an opinion?

A. The audit time budget.

B. The auditors judgment.

C. Generally accepted accounting quality standards.

D. The auditors working papers.

47. Failure to detect material dollar errors in the financial statements is a risk which the auditors primarily mitigate by:

A. Performing substantive procedures.

B. Performing tests of controls.

C. Assessing control risk.

D. Obtaining a client representation letter.

48. An independent auditor finds that the Simmer Corporation occupies office space, at no charge, in an office building owned by a shareholder. This finding indicates the existence of:

A. Management fraud.

B. Related party transactions.

C. Window dressing.

D. Weak internal control.

49. Which of the following would not necessarily be considered a related party transaction?

A. Payment of a bonus to the president.

B. Purchases from another corporation that is controlled by the corporations chief stockholder.

C. Loan from the corporation to a major stockholder.

D. Sale of land to the corporation by the spouse of a director.

50. The date of the management representation letter should coincide with the:

A. Date of the auditors report.

B. Balance sheet date.

C. Date of the latest subsequent event referred to in the notes to the financial statements.

D. Date of the engagement agreement.

51. An example of an analytical procedure is the comparison of:

A. Financial information with similar information regarding the industry in which the entity operates.

B. Recorded amounts of major disbursements with appropriate invoices.

C. Results of a statistical sample with the expected characteristics of the actual population.

D. EDP generated data with similar data generated by a manual accounting system.

52. When considering the use of managements written representations as audit evidence about the completeness assertion, an auditor should understand that such representations:

A. Complement, but do not replace, substantive procedures designed to support the assertion.

B. Constitute sufficient evidence to support the assertion when considered in combination with a moderate assessed level of control risk.

C. Are generally sufficient audit evidence to support the assertion regardless of the assessed level of control risk.

D. Replace the assessed level of control risk as evidence to support the assertions.

53. Which of the following expressions is least likely to be included in a clients representation letter?

A. No events have occurred subsequent to the balance sheet date that require adjustment to, or disclosure in, the financial statements.

B. The company has complied with all aspects of contractual agreements that would have a material effect on the financial statements in the event of noncompliance.

C. Management acknowledges responsibility for illegal actions committed by employees.

D. Management has made available all financial statements, including notes.

54. Which of the following statements is generally correct about audit evidence?

A. The auditors direct personal knowledge, obtained through observation and inspection, is more persuasive than information obtained indirectly from independent outside sources.

B. To be appropriate, audit evidence must be sufficient.

C. Accounting data alone may be considered sufficient appropriate audit evidence to issue an unqualified opinion on financial statements.

D. Appropriateness of audit evidence refers to the amount of corroborative evidence to be obtained.

55. Which of the following statements relating to audit evidence is the most accurate statement?

A. Audit evidence gathered by an auditor from outside an enterprise is reliable.

B. Accounting data developed under satisfactory conditions of internal control are more relevant than data developed under unsatisfactory internal control conditions.

C. Oral representations made by management are not valid evidence.

D. The auditor must obtain sufficient appropriate audit evidence.

56. Which of the following is not a typical analytical procedure?

A. Study of relationships of the financial information with relevant nonfinancial information.

B. Comparison of the financial information with similar information regarding the industry in which the entity operates.

C. Comparison of recorded amounts of major disbursements with appropriate invoices.

D. Comparison of the financial information with budgeted amounts.

57. Which of the following is not a primary purpose of audit working papers?

A. To coordinate the examination.

B. To assist in preparation of the audit report.

C. To support the financial statements.

D. To provide evidence of the audit work performed.

58. Concerning retention of working papers, the Sarbanes-Oxley Act:

A. Has no provisions.

B. Requires permanent retention.

C. Requires retention for at least 7 years.

D. Requires retention for a period of 4 or less years.

59. During an audit engagement pertinent data are prepared and included in the audit working papers. The working papers primarily are considered to be:

A. A client-owned record of conclusions reached by the auditors who performed the engagement.

B. Evidence supporting financial statements.

C. Support for the auditors representations as to compliance with generally accepted auditing standards.

D. A record to be used as a basis for the following years engagement.

60. Although the quantity, type, and content of working papers will vary with the circumstances, the working papers generally would include the:

A. Copies of those client records examined by the auditor during the course of the engagement.

B. Evaluation of the efficiency and competence of the audit staff assistants by the partner responsible for the audit.

C. Auditors comments concerning the efficiency and competence of client management personnel.

D. Auditing procedures followed and the testing performed in obtaining audit evidence.

61. The permanent file section of the working papers that is kept for each audit client most likely contains:

A. Review notes pertaining to questions and comments regarding the audit work performed.

B. A schedule of time spent on the engagement by each individual auditor.

C. Correspondence with the clients legal counsel concerning pending litigation.

D. Narrative descriptions of the clients accounting procedures and controls.

62. Working papers that record the procedures used by the auditor to gather evidence should be:

A. Considered the primary support for the financial statements being examined.

B. Viewed as the connecting link between the books of account and the financial statements.

C. Designed to meet the circumstances of the particular engagement.

D. Destroyed when the audited entity ceases to be a client.

63. In general, which of the following statements is correct with respect to ownership, possession, or access to working papers prepared by a CPA firm in connection with an audit?

A. The working papers may be obtained by third parties where they appear to be relevant to issues raised in litigation.

B. The working papers are subject to the privileged communication rule which, in a majority of jurisdictions, prevents third-party access to the working papers.

C. The working papers are the property of the client after the client pays the fee.

D. The working papers must be retained by the CPA firm for a period of ten years.

64. Confirmation would be most effective in addressing the existence assertion for the:

A. Addition of a milling machine to a machine shop.

B. Payment of payroll during regular course of business.

C. Inventory held on consignment.

D. Granting of a patent for a special process developed by the organization.

In preparing for an audit of the retail footwear division of a major retail organization, the auditor gathered the following information about the organizations stores:

65. An auditor performs analytical procedures that involve comparing the gross margins of various divisional operations with those of other divisions and with the individual divisions performance in previous years. The auditor notes a significant increase in the gross margin at one division. The auditor does some preliminary investigation and also notes that there were no changes in products, production methods, or divisional management during the year. Based on the above information, the most likely cause of the increase in gross margin would be:

A. An increase in the number of competitors selling similar products.

B. A decrease in the number of suppliers of the material used in manufacturing the product.

C. An overstatement of year-end inventory.

D. An understatement of year-end accounts receivable.

66. Management is concerned about the lower level of profitability in the Mid-Central Region. Which of the following would be a reasonable possible explanation(s) of the lower profitability for the Mid-Central Region?

I. The lower number of stores in the Mid-Central Region.
II. Sales employees are not as productive in generating sales as those in other regions.
III. The Mid-Central Region has a lower gross margin.

A. I only.

B. II only.

C. II and III only.

D. I, II and III.

67. Based on the previous information, which of the following preliminary conclusions can the auditor use as a basis for further investigations?

A. Sales per store are directly related to the size of the store.

B. Sale clerks are less productive in larger size stores.

C. Gross margin is directly related to the size of the store.

D. Average square feet of store correlates with the number of stores in the district.

68. Which of the following statements is not correct regarding the auditors further analysis?

A. The Mid-Central Region has fewer average full-time equivalent employees per store than the other regions per store.

B. The other regions all generate higher sales per square foot than the Mid-Central Region.

C. The Mid-Central Region has the highest average wages per full-time equivalent employee.

D. The largest contributor to total corporate profits is the Southwest Region.

69. Management has centralized purchasing and uses a model based upon previous years sales with adjustments for trends in the market place, e.g., the trend to more casual shoes. A staff auditor has suggested that the centralized purchasing may be one of the reasons for the lower level of profitability in the Mid-Central Region. Which of the following would be the best single audit procedure to address the staff auditors assertion?

A. Take a sample of receiving documents at stores and trace to purchase orders to determine the length of time between the purchase and delivery of the goods.

B. Interview store managers in the Mid-Central Region to determine their attitude toward centralized purchasing.

C. Perform an inventory count at selected stores in the Mid-Central Region and determine if adjustments are needed to the perpetual records.

D. Perform a product-line analysis of sales and purchases in the Mid-Central Region and compare with other regions.

70. What type of transactions ordinarily have high inherent risk because they involve management judgments or assumptions in formulating accounting balances?

A. Estimation.

B. Nonroutine.

C. Qualified.

D. Routine.

71. Assertions with high inherent risk are least likely to involve:

A. Complex calculations.

B. Difficult accounting issues.

C. Routine transactions.

D. Significant judgment by management.

72. The date on which no information may be deleted from audit documentation is the

A. Clients year-end.

B. Documentation completion date.

C. Last date of significant fieldwork.

D. All of the above are incorrect in that no information may ever be deleted from audit documentation.

73. In evaluating an entitys accounting estimates, one of the auditors objectives is to determine whether the estimates are

A. Prepared in a satisfactory control environment.

B. Consistent with industry guidelines.

C. Based on verifiable objective assumptions.

D. Reasonable in the circumstances.

74. In obtaining sufficient appropriate audit evidence, the work of which type or types of specialists may be relied upon?

A. Option A

B. Option B

C. Option C

D. Option D

75. For each of the audit procedures listed below select the type of audit procedure, if any, that the auditor performed. A type of audit procedure may be selected once or not at all.

1. The auditor selected a sample of invoices and agreed the vendor to the approved vendor list, as had been required by the clients internal control procedures. Inspection of tangible assets. ____
2. During the physical inventory count, the auditor requested that certain containers of inventory items be opened to ensure they were not empty. Observation. ____
3. The auditor sent a letter to the companys outside attorney accompanied by managements request for information concerning pending or threatened litigation, claims, and assessments. Inspection of records or documents. ____
4. During a site visit to a branch warehouse, the auditor noted unauthorized personnel have access to the inventory. Inquiry. ____
5. The auditor scanned the repairs and maintenance account for unusually large amounts. Recalculation. ____
6. The auditing firms computer assisted audit specialist obtained an electronic billing file from the company and checked the accuracy of the summarized billings file. Reperformance. ____
7. The auditor obtained a copy of the companys accounting manual and read the section on inventory to prepare for the physical inventory observation. Analytical Procedures. ____

76. Analytical procedures are substantive procedures that may be used to provide evidence about specific accounts and classes of transactions.

a. Describe three major types of comparisons the auditor might make in performing analytical procedures.
b. At what stages of the audit are analytical procedures performed and what purpose do they serve at each stage?

77. Audit working papers are an integral part of an examination in accordance with generally accepted auditing standards.

a. Describe three major functions of the audit working papers.
b. Distinguish between the permanent working paper file and the current working paper file.

78. The following is an audit working paper prepared by an assistant on the Williams audit:

Column footed.
Amount agrees to amount recorded as a deposit on the bank statement and description agrees with receipt enclosed with 12/31/0X bank statement. This note is the Wilde note receivable that was recorded as a receipt by the client in the cash receipts journal on 1/3/0X. The receivable was appropriately credited and properly reflected in the January cash receipts journal. No adjustment needed as bank and books simply record this in different periods.
Agreed to 12/31/0X bank statement.
Agreed to general ledger.
A 1

Required: Prepare a list of review points as the preparer of this working. You may assume that any other working papers referred to are appropriate. You will receive credit for proper points you bring up and lose credit for improper ones and omissions.

5 Key

1. The professional standards consider calculating depreciation expense a routine transaction.

FALSE

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Risk Analysis
Blooms: Apply
Difficulty: Medium
Learning Objective: 05-02 Identify and explain the components of audit risk.
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #1

2. The most reliable form of documentary evidence generally is considered to be documents created by the client.

FALSE

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #2

3. A vendors invoice is an example of documentary evidence created by a third party and held by the client.

TRUE

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #3

4. In performing analytical procedures, the auditors may use dollar amounts, physical quantities, or percentages.

TRUE

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Analytical Procedures
Whittington Chapter 05 #4

5. The primary purpose of a letter of representations is to obtain additional evidence about specific accounts.

FALSE

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Apply
Difficulty: Hard
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #5

6. The auditors should propose an adjusting journal entry for all material related-party transactions.

FALSE

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Risk Analysis
Blooms: Apply
Difficulty: Hard
Learning Objective: 05-05 Describe the considerations involved in auditing subjective areas; such as certain financial statement items valued at fair value.
Topic: Evidence for Subjective Areas
Whittington Chapter 05 #6

7. When the risk of material misstatement for an account is high, the auditors may perform additional substantive procedures to restrict detection risk to a lower level.

TRUE

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Risk Analysis
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-02 Identify and explain the components of audit risk.
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #7

8. Working papers of continuing audit interest usually are filed with the administrative working papers.

FALSE

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-09 Describe the types of working papers and the way they are organized.
Topic: Audit Documentation
Whittington Chapter 05 #8

9. The use of lead schedules is designed to increase the detail of the working trial balance.

FALSE

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-09 Describe the types of working papers and the way they are organized.
Topic: Audit Documentation
Whittington Chapter 05 #9

10. Adjusting journal entries are ordinarily recorded by the client, while reclassifying journal entries need not be recorded.

TRUE

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-09 Describe the types of working papers and the way they are organized.
Topic: Audit Documentation
Whittington Chapter 05 #10

11. To be effective, analytical procedures performed near the end of the audit should be performed by

A. The partner performing the quality review of the audit.

B. A beginning staff accountant who has had no other work related to the engagement.

C. A manager or partner who has a comprehensive knowledge of the clients business and industry.

D. The CPA firms quality control manager.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Analytical Procedures
Whittington Chapter 05 #11

12. The components of the risk of misstatement are:

A. Option A

B. Option B

C. Option C

D. Option D

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Risk Analysis
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-02 Identify and explain the components of audit risk.
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #12

13. Financial statement assertions are established for classes of transactions

A. Option A

B. Option B

C. Option C

D. Option D

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Risk Analysis
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-01 Explain the relationship between audit risk; audit evidence; and financial statement assertions.
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #13

14. Further audit procedures include:

A. Option A

B. Option B

C. Option C

D. Option D

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Audit Procedures
Whittington Chapter 05 #14

15. Assertions that have a meaningful bearing on whether an account balance, transaction class or disclosure is fairly stated are referred to as:

A. Appropriate assertions.

B. Sufficient assertions.

C. Relevant assertions.

D. Reliable assertions.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Risk Analysis
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-01 Explain the relationship between audit risk; audit evidence; and financial statement assertions.
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #15

16. Which of the following is not an assertion relating to classes of transactions?

A. Accuracy.

B. Sufficiency.

C. Cutoff.

D. Classification.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-03 Distinguish between the concepts of sufficient and appropriate as they apply to audit evidence.
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #16

17. Which of the following is required documentation in an audit?

A. A list of major accounts.

B. A flowchart of the clients organization.

C. A written audit program.

D. A memo setting forth the scope of the audit.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Apply
Difficulty: Hard
Learning Objective: 05-06 Describe the purposes of audit documentation.
Topic: Audit Documentation
Whittington Chapter 05 #17

18. Which of the following is not considered to be an analytical procedure?

A. Comparisons of financial statement amounts with source documents.

B. Comparisons of financial statement amounts with nonfinancial data.

C. Comparisons of financial statement amounts with budgeted amounts.

D. Comparisons of financial statement amounts with comparable prior year amounts.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #18

19. An auditor plans to apply substantive tests to the details of asset and liability accounts as of an interim date rather than as of the balance sheet date. The auditor should be aware that this practice

A. Eliminates the use of certain statistical sampling methods that would otherwise be available.

B. Presumes that the auditor will reperform the tests as of the balance sheet date.

C. Should be especially considered when there are rapidly changing economic conditions.

D. Potentially increases the risk that errors that exist at the balance sheet date will not be detected.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Apply
Difficulty: Hard
Learning Objective: 05-04 List and describe types of audit evidence.
Source: AICPA
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #19

20. An auditor compared the current-year gross margin with the prior-year gross margin to determine if cost of sales is reasonable. What type of audit procedure was performed?

A. Test of transactions.

B. Analytical procedures.

C. Test of controls.

D. Test of details.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-04 List and describe types of audit evidence.
Source: AICPA
Topic: Audit Procedures
Whittington Chapter 05 #20

21. The inspection of a vendors invoice by the auditors is:

A. Direct evidence about occurrence of a transaction.

B. Physical evidence about occurrence of a transaction.

C. Documentary evidence about occurrence of a transaction.

D. Part of the clients accounting system.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #21

22. The auditors of Smith Electronics wish to limit the audit risk of material misstatement in the test of accounts receivable to 5 percent. They believe that inherent risk is 100%, and there is a 40% risk that material misstatement could have bypassed the clients system of internal control. What is the maximum detection risk the auditors should specify in their substantive procedures of details of accounts receivable?

A. 5%.

B. 12.5%.

C. 42.7%.

D. 60%.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Risk Analysis
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-02 Identify and explain the components of audit risk.
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #22

23. Analytical procedures are required at the risk assessment stage and as:

A. Tests of internal control.

B. Substantive procedures.

C. A part of the final overall review.

D. Computer generated procedures.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Analytical Procedures
Whittington Chapter 05 #23

24. During financial statement audits, auditors seek to restrict which type of risk?

A. Control risk.

B. Detection risk.

C. Inherent risk.

D. Account risk.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Risk Analysis
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-02 Identify and explain the components of audit risk.
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #24

25. Which of the following groups are not considered a specialist by AICPA Professional Standards?

A. Appraisers.

B. Internal auditors.

C. Engineers.

D. Geologists.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #25

26. CPA wishes to use a representation letter as a substitute for performing other audit procedures. Doing so:

A. Violates professional standards.

B. Is acceptable, but should only be done when cost justified.

C. Is acceptable, but only for non-public clients.

D. Is acceptable and desirable under all conditions.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #26

27. Which of the following best describes the problem with the use of published industry averages for analytical procedures?

A. Lack of comparability.

B. Lack of sufficiency.

C. Lack of accuracy.

D. Lack of availability.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Analytical Procedures
Whittington Chapter 05 #27

28. In auditing an asset valued at fair value, which of the following potentially provides the auditor with the strongest evidence?

A. A price for a similar asset obtained from an active market.

B. An appraisal obtained discounting future cash flows.

C. Managements judgment of the cost to purchase an equivalent asset.

D. The historical cost of the asset.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Risk Analysis
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-05 Describe the considerations involved in auditing subjective areas; such as certain financial statement items valued at fair value.
Topic: Evidence for Subjective Areas
Whittington Chapter 05 #28

29. An auditor should expect that fair value is the price that would be received to sell an asset in an orderly transaction between the market participants at the:

A. Acquisition date of the asset.

B. Audit report date.

C. Expected replacement date of the asset.

D. Measurement date (ordinarily the date of the financial statements).

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Risk Analysis
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-05 Describe the considerations involved in auditing subjective areas; such as certain financial statement items valued at fair value.
Topic: Evidence for Subjective Areas
Whittington Chapter 05 #29

30. Which of the following best describes the reason that auditors are concerned with the detection of related party transactions?

A. The financial statements must often be adjusted for the effects of material related party transactions.

B. Material related party transactions must be disclosed in the notes to the financial statements.

C. The substance of related party transactions will differ from their form.

D. In a related party transaction one party has the ability to exercise significant influence over the other party.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Risk Analysis
Blooms: Apply
Difficulty: Hard
Learning Objective: 05-05 Describe the considerations involved in auditing subjective areas; such as certain financial statement items valued at fair value.
Topic: Evidence for Subjective Areas
Whittington Chapter 05 #30

31. Which of the following is not a basic procedure used in an audit?

A. Risk assessment procedures.

B. Substantive procedures.

C. Tests of controls.

D. Tests of direct evidence.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Audit Procedures
Whittington Chapter 05 #31

32. Which of the following is not a financial statement assertion relating to account balances?

A. Completeness.

B. Existence.

C. Rights and obligations.

D. Recorded value and discounts.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Risk Analysis
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-01 Explain the relationship between audit risk; audit evidence; and financial statement assertions.
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #32

33. Which of the following is generally true about the sufficiency of audit evidence?

A. The amount of evidence that is sufficient varies inversely with the acceptable risk of material misstatement.

B. The amount of evidence concerning a particular account varies inversely with the materiality of the account.

C. The amount of evidence concerning a particular account varies inversely with the inherent risk of the account.

D. When evidence is appropriate with respect to an account it is also sufficient.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Apply
Difficulty: Hard
Learning Objective: 05-03 Distinguish between the concepts of sufficient and appropriate as they apply to audit evidence.
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #33

34. Which of the following is true about analytical procedures?

A. Performing analytical procedures results in the most reliable form of evidence.

B. Analytical procedures are tests of controls used to evaluate the quality of a clients internal control.

C. Analytical procedures are used for planning, but they should not be used to obtain evidence as to the reasonableness of specific account balances.

D. Analytical procedures are used in risk assessment, as a substantive procedure for specific accounts, and near the completion of the audit of the audited financial statements.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Analytical Procedures
Whittington Chapter 05 #34

35. Which of the following is a basic approach often used by auditors to evaluate the reasonableness of accounting estimates?

A. Confirmation.

B. Observation.

C. Reviewing subsequent events or transactions.

D. Analyzing corporate organizational structure.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Risk Analysis
Blooms: Apply
Difficulty: Hard
Learning Objective: 05-05 Describe the considerations involved in auditing subjective areas; such as certain financial statement items valued at fair value.
Topic: Evidence for Subjective Areas
Whittington Chapter 05 #35

36. An auditor is performing an analytical procedure that involves comparing a clients account balances over time. This technique is referred to as:

A. Vertical analysis.

B. Horizontal analysis.

C. Cross-sectional analysis.

D. Comparison analysis.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Analytical Procedures
Whittington Chapter 05 #36

37. An auditor is performing an analytical procedure that involves comparing a clients ratios with other companies in the same industry. This technique is referred to as:

A. Vertical analysis.

B. Horizontal analysis.

C. Cross-sectional analysis.

D. Comparison analysis.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Analytical Procedures
Whittington Chapter 05 #37

38. An auditor is performing an analytical procedure that involves developing common-size financial statements. This technique is referred to as:

A. Vertical analysis.

B. Horizontal analysis.

C. Cross-sectional analysis.

D. Comparison analysis.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Analytical Procedures
Whittington Chapter 05 #38

39. Which of the following is not a basic approach often used by auditors to evaluate the reasonableness of accounting estimates?

A. Confirmation of amounts.

B. Review of managements process of development.

C. Independent development of an estimate.

D. Review of subsequent events.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Risk Analysis
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-05 Describe the considerations involved in auditing subjective areas; such as certain financial statement items valued at fair value.
Topic: Evidence for Subjective Areas
Whittington Chapter 05 #39

40. The audit time budget is an example of:

A. A supporting schedule.

B. An administrative working paper.

C. A lead schedule.

D. A corroborative working paper.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-09 Describe the types of working papers and the way they are organized.
Topic: Audit Documentation
Whittington Chapter 05 #40

41. A schedule set up to combine similar general ledger accounts, the total of which appears on the working trial balance as a single amount, is referred to as a:

A. Supporting schedule.

B. Lead schedule.

C. Corroborating schedule.

D. Reconciling schedule.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-09 Describe the types of working papers and the way they are organized.
Topic: Audit Documentation
Whittington Chapter 05 #41

42. Which of the following is not a function of working papers?

A. Provide support for the auditors report.

B. Provide support for the accounting records.

C. Aid partners in planning and conducting future audits.

D. Document staff compliance with generally accepted auditing standards.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-06 Describe the purposes of audit documentation.
Topic: Audit Documentation
Whittington Chapter 05 #42

43. A schedule listing account balances for the current and previous years, and columns for adjusting and reclassifying entries proposed by the auditors to arrive at the final mount that will appear in the financial statement, is referred to as a:

A. Working trial balance.

B. Lead schedule.

C. Summarizing schedule.

D. Supporting schedule.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-09 Describe the types of working papers and the way they are organized.
Topic: Audit Documentation
Whittington Chapter 05 #43

44. The auditors use analytical procedures during the course of an audit. The most important phase of performing these procedures is the:

A. Vouching of all data supporting various ratios.

B. Investigation of significant variations and unusual relationships.

C. Comparison of client-computed statistics with industry data on a quarterly and full-year basis.

D. Recalculation of industry date.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-04 List and describe types of audit evidence.
Topic: Analytical Procedures
Whittington Chapter 05 #44

45. The auditors must obtain written client representations that normally should be signed by:

A. The president and the chairperson of the board.

B. The treasurer and the internal auditor.

C. The chief executive officer and the chief financial officer.

D. The corporate counsel and the audit committee chairperson.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-04 List and describe types of audit evidence.
Source: AICPA
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #45

46. Which of the following ultimately determines the specific audit procedures necessary to provide independent auditors with a reasonable basis for the expression of an opinion?

A. The audit time budget.

B. The auditors judgment.

C. Generally accepted accounting quality standards.

D. The auditors working papers.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-04 List and describe types of audit evidence.
Source: AICPA
Topic: Audit Procedures
Whittington Chapter 05 #46

47. Failure to detect material dollar errors in the financial statements is a risk which the auditors primarily mitigate by:

A. Performing substantive procedures.

B. Performing tests of controls.

C. Assessing control risk.

D. Obtaining a client representation letter.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-04 List and describe types of audit evidence.
Source: AICPA
Topic: Audit Procedures
Whittington Chapter 05 #47

48. An independent auditor finds that the Simmer Corporation occupies office space, at no charge, in an office building owned by a shareholder. This finding indicates the existence of:

A. Management fraud.

B. Related party transactions.

C. Window dressing.

D. Weak internal control.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Risk Analysis
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-05 Describe the considerations involved in auditing subjective areas; such as certain financial statement items valued at fair value.
Source: AICPA
Topic: Evidence for Subjective Areas
Whittington Chapter 05 #48

49. Which of the following would not necessarily be considered a related party transaction?

A. Payment of a bonus to the president.

B. Purchases from another corporation that is controlled by the corporations chief stockholder.

C. Loan from the corporation to a major stockholder.

D. Sale of land to the corporation by the spouse of a director.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Risk Analysis
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-05 Describe the considerations involved in auditing subjective areas; such as certain financial statement items valued at fair value.
Source: AICPA
Topic: Evidence for Subjective Areas
Whittington Chapter 05 #49

50. The date of the management representation letter should coincide with the:

A. Date of the auditors report.

B. Balance sheet date.

C. Date of the latest subsequent event referred to in the notes to the financial statements.

D. Date of the engagement agreement.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-04 List and describe types of audit evidence.
Source: AICPA
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #50

51. An example of an analytical procedure is the comparison of:

A. Financial information with similar information regarding the industry in which the entity operates.

B. Recorded amounts of major disbursements with appropriate invoices.

C. Results of a statistical sample with the expected characteristics of the actual population.

D. EDP generated data with similar data generated by a manual accounting system.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-04 List and describe types of audit evidence.
Source: AICPA
Topic: Analytical Procedures
Whittington Chapter 05 #51

52. When considering the use of managements written representations as audit evidence about the completeness assertion, an auditor should understand that such representations:

A. Complement, but do not replace, substantive procedures designed to support the assertion.

B. Constitute sufficient evidence to support the assertion when considered in combination with a moderate assessed level of control risk.

C. Are generally sufficient audit evidence to support the assertion regardless of the assessed level of control risk.

D. Replace the assessed level of control risk as evidence to support the assertions.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-04 List and describe types of audit evidence.
Source: AICPA
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #52

53. Which of the following expressions is least likely to be included in a clients representation letter?

A. No events have occurred subsequent to the balance sheet date that require adjustment to, or disclosure in, the financial statements.

B. The company has complied with all aspects of contractual agreements that would have a material effect on the financial statements in the event of noncompliance.

C. Management acknowledges responsibility for illegal actions committed by employees.

D. Management has made available all financial statements, including notes.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-04 List and describe types of audit evidence.
Source: AICPA
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #53

54. Which of the following statements is generally correct about audit evidence?

A. The auditors direct personal knowledge, obtained through observation and inspection, is more persuasive than information obtained indirectly from independent outside sources.

B. To be appropriate, audit evidence must be sufficient.

C. Accounting data alone may be considered sufficient appropriate audit evidence to issue an unqualified opinion on financial statements.

D. Appropriateness of audit evidence refers to the amount of corroborative evidence to be obtained.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-04 List and describe types of audit evidence.
Source: AICPA
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #54

55. Which of the following statements relating to audit evidence is the most accurate statement?

A. Audit evidence gathered by an auditor from outside an enterprise is reliable.

B. Accounting data developed under satisfactory conditions of internal control are more relevant than data developed under unsatisfactory internal control conditions.

C. Oral representations made by management are not valid evidence.

D. The auditor must obtain sufficient appropriate audit evidence.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Remember
Difficulty: Easy
Learning Objective: 05-03 Distinguish between the concepts of sufficient and appropriate as they apply to audit evidence.
Source: AICPA
Topic: Risk, Evidence, and Assertions
Whittington Chapter 05 #55

56. Which of the following is not a typical analytical procedure?

A. Study of relationships of the financial information with relevant nonfinancial information.

B. Comparison of the financial information with similar information regarding the industry in which the entity operates.

C. Comparison of recorded amounts of major disbursements with appropriate invoices.

D. Comparison of the financial information with budgeted amounts.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-04 List and describe types of audit evidence.
Source: AICPA
Topic: Analytical Procedures
Whittington Chapter 05 #56

57. Which of the following is not a primary purpose of audit working papers?

A. To coordinate the examination.

B. To assist in preparation of the audit report.

C. To support the financial statements.

D. To provide evidence of the audit work performed.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-06 Describe the purposes of audit documentation.
Source: AICPA
Topic: Audit Documentation
Whittington Chapter 05 #57

58. Concerning retention of working papers, the Sarbanes-Oxley Act:

A. Has no provisions.

B. Requires permanent retention.

C. Requires retention for at least 7 years.

D. Requires retention for a period of 4 or less years.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-08 Identify matters that must be included in audit working papers.
Topic: Audit Documentation
Whittington Chapter 05 #58

59. During an audit engagement pertinent data are prepared and included in the audit working papers. The working papers primarily are considered to be:

A. A client-owned record of conclusions reached by the auditors who performed the engagement.

B. Evidence supporting financial statements.

C. Support for the auditors representations as to compliance with generally accepted auditing standards.

D. A record to be used as a basis for the following years engagement.

AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Blooms: Understand
Difficulty: Medium
Learning Objective: 05-06 Describe the purposes of audit documentation.
Source: AICPA
Topic: Audit Documentation
Whittington Chapter 05 #59

60. Although the quantity, type, and content of working papers will vary with the circumstances, the working papers generally would include the:

A. Copies of those client records examined by the auditor during the course of the engagement.

B. Evaluation of the efficiency and competence of the audit staff assistants by the partner responsible for the audit.

C. Auditors comments concerning the efficiency and competence of clien

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